Tax Professional - latest Issue
Volume 2016, Issue 27, 2016
Source: Tax Professional 2016 (2016)More Less
Over the years we have heard budget speeches from various Ministers of Finance. However, the 2016 budget speech was the most anticipated one. This was fuelled by a number of key developments that took place towards the end of last year, including the President's decision to remove Finance Minister Nhlanhla Nene and the appointment of Des van Rooyen in his place. As the result of the adverse reaction of the markets, we saw van Rooyen being replaced by Pravin Gordhan in an attempt to salvage the situation. As much as the budget speech was fair and balanced, it did, however, lack the 'how' part, especially in various areas in which implementation processes need to be adopted. I trust, though, that the National Treasury has it covered and that all will be revealed in due course.
Author Lynley MainSource: Tax Professional 2016, pp 5 –6 (2016)More Less
Finance Minister Pravin Gordhan's 2016 budget speech was a landmark for a number of reasons, most notable of which was the need to put concerns of a downgrade to junk status to rest, while introducing the necessary fiscal constraints to decrease the budget deficit. The focus was predominantly on targeting civil servant expenditure, not borrowing beyond South Africa's ability to repay, and increasing wealth and sin taxes to aid revenue collection. To better understand the implications of Gordhan's proposals, SAIPA hosted a panel discussion at the Woodmead Country Club. The panel was made up of Tax Ombudsman Judge Bernard Ngoepe, Head of Tax at Wits University Depika Singh, tax specialist Ettiene Retief, Head of Economic and Business Sciences at Wits Professor Jannie Rossouw, and SAIPA's Faith Ngwenya.
Source: Tax Professional 2016, pp 7 –9 (2016)More Less
The 2016 Budget was eagerly anticipated, not only in South Africa but globally, in a hostile political and economic environment against the background of the threats of credit rating downgrades to junk status. The Budget that was presented satisfied both the local population and the global investors and economists. South Africans are resilient and have a reputation of gracefully overcoming their hurdles and have the ability to rise to the occasion when required to do so. There are no reasons to feel different about our ability and capacity to exit from our current difficulties. In fact, the Minister of Finance and his team can only perform well when facing a crisis. Ask anyone that knows the current Minister of Finance, Mr Pravin Gordhan well; give him a smooth-sailing Ministry and he will fall asleep with boredom! South Africans have produced many leaders with credibility and these public-personalities are recognised globally for their public service. In this regard, the retired Anglican Bishop Desmond Tutu, amongst the many, must be mentioned.
Source: Tax Professional 2016, pp 10 –13 (2016)More Less
The right to review and appeal is an important factor in ensuring a fair tax system. In the event of a dispute to an assessment, taxpayers have a right to lodge an objection which must be finalised by SARS within reasonable time. Chapter 9 of the Tax Administration Act, read with the Rules promulgated under Section 103, sets out the procedure for taxpayers who are aggrieved by an assessment raised by SARS. It is important to note that the obligation to pay the disputed assessment is not suspended by the objection against the assessment. Any mention of the term 'days' in this article refer to business days as defined in Section 1 of the Tax Administration Act.
Source: Tax Professional 2016, pp 14 –15 (2016)More Less
It is horrifying to hear the many occasions that taxpayers have had their bank accounts emptied by SARS for amounts equivalent to their tax liability. More devastating is the fact that taxpayers are not even aware that funds have been removed from their bank accounts. How dreadful is this behaviour by a veritable monster? The indignant taxpayer is confronted by voluminous cash flow problems so that the payments to suppliers and staff are delayed. This frequently plunges the taxpayer into financial distress and/or even liquidation.
Source: Tax Professional 2016, pp 16 –18 (2016)More Less
Retirement reforms, throughout the world, are considered politically charged. There is no reason for retirement reforms in South Africa to be excluded from the international perception. In the 1980s, senior staff belonging to a group retirement fund were members of a provident fund. The less senior staff of the same company were members of a pension fund. Why was this so? Members of the provident fund were permitted, in terms of the fund rules, to withdraw their full lump-sum benefit at retirement age. The argument then was that the senior staff had good financial sense and, consequently, were better equipped to manage large sums of retirement benefits.
SARS hits back : taxpayers may no longer frustrate the audit process in the hope of prescription : tax technicalAuthor Natalie NapierSource: Tax Professional 2016 (2016)More Less
The Memorandum on the Objects of Tax Administration Laws Amendment Bill, 2015 recognises that too many of SARS's resources are spent on information entitlement disputes, as opposed to conducting an audit within the prescribed period for additional assessments. This leaves insufficient time to ensure that SARS has all relevant information at its disposal to make an accurate assessment. The Memorandum recognises that the failure to provide information or that information entitlement disputes are often tactical or even vexatious, given the fact that taxpayers, particularly large corporates, are very much aware of the period within which SARS must finalise the audit and issue additional assessments.
Source: Tax Professional 2016, pp 20 –21 (2016)More Less
We have noticed that there is still a lot of confusion as far as withholding tax on interest is concerned, hence the need to revisit this legislation. The definition of interest in s50A (withholding tax on interest) was updated to refer to the definition of interest under Section 24J (1), but only refers to paragraphs (a) or (b). The biggest question remains, what is WTI?
Source: Tax Professional 2016, pp 22 –23 (2016)More Less
The Supreme Court of Appeal (SCA) in Lagoon Beach Hotel v Lehane (235/2015)  ZA SCA 2010 (21 December 2015) recently considered the granting of a preservation order to a foreign trustee and the recognition of a foreign trustee by our courts in exceptional circumstances. The facts of the matter concerned an insolvent of Irish descent that resided in the USA and conducted business through an intricate web of holding and subsidiary companies registered in different parts of the world, including tax havens. However, the insolvent's immense wealth was short lived as he was first declared bankrupt in USA on 23 March 2013 and thereafter declared bankrupt in Ireland. Pursuant to the two bankruptcy orders, a trustee was appointed in USA (American trustee) and another was appointed in Ireland (Irish trustee).
Source: Tax Professional 2016, pp 26 –29 (2016)More Less
Generally, an international or cross-border transaction involves the interaction between a South African taxpayer and a party (or parties) in a foreign country.The first task is to determine which country should levy the tax on the international transaction. The following must betaken into consideration:
- The residency of an individual or a company, transacting with South African taxpayer, and moreover;
- The closeness of the income to the country.
Source: Tax Professional 2016 (2016)More Less
On 22 May 2015 representatives of the South Africa and Mauritius revenue authorities signed a memorandum of understanding on the factors to be considered in applying Article 4(3) of the treaty between the two countries. There had been uncertainty about the application of this Article since the new treaty was signed in May 2013. Article 4(3) provides that where a person other than an individual is a resident of both countries, the competent authorities of both countries will endeavour to determine by mutual agreement where the person is deemed to be resident for purposes of the treaty. The memorandum sets out the factors they will consider in arriving at their decisions.